The rationale of rationality

By H.M. Weesie, C.C.P. Snijders and V.W. Buskens

Abstract

Our research starts from the assumption that actors use a single decision
theory to guide them on how to behave in all possible one-shot
two-person encounters. To address which decision theories perform
well, we let 17 theories compete in a large number of randomly
selected symmetric 2 × 2 games. It turns out that the decision theory
that optimizes its own payoff under the assumption that the other actor
behaves randomly wins by a small margin. Second, we study the ‘evolution
of rationality.’ In a quasi-biological setup where more successful
strategies generate more offspring, the decision theory that always
plays the behavior that belongs to the risk-dominant Nash equilibrium
emerges as the long-term survivor from an initially mixed pool of decision
theories.We also confront the decision theories with human experimental
data. The decision theory that always aims for the highest
possible payoff for itself performs best against humans.